Abstract
The paper proposes a financial model suitable for ensuring the economic, financial and social sustainability of this basic protection. We have calculated the estimated cost for the Spanish population in 2010 and have estimated the cost for the following 12 years (three legislatures) under a range of demographic and economic assumptions. The results are then analysed to draw conclusions about the viability and sustainability of this basic social protection floor. A remarkable finding is that it is feasible to obtain greater coverage, but by requiring contributions of the State or other financial resources.
Acknowledgments
We are especially grateful to anonymous reviewers for their many insightful and constructive suggestions. All errors are our own. This study was supported by UFI 11/51 (Business Management & Territorial/Social Governance) at the UPV/EHU, Polibienestar Research Institute and Consolidated Research Group EJ/GV: IT 897-16 Econometrics Research Group, Basque Government grant IT-642-13 and Consolidated Research Group EJ/GV: IT 897-16.
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Appendix
A Results of the quantile regression and its differential per region
| Quantile regression | Region | Diferential | |
|---|---|---|---|
| 25 % | ANDALUCIA, | 531,85 * | |
| AGE | 49,71 * | CEUTA Y MELILLA | −122,01 |
| −128,078 | ARAGON | 1183,51 * | |
| AGE SQUARE | −0,27 * | −225,51 | |
| (−72,2) | ASTURIAS | 658,29 * | |
| NUMBER OF DEPENDENTS | −648,87 * | −120,69 | |
| (−681,21) | BALEARES | 1288,15 * | |
| TOWN > 50,000 | 508,35 * | −223,54 | |
| −256,7 | CANARIAS | 284,44 * | |
| TOWN (10,000– 50,000) | 214,60 * | −54,89 | |
| −96,58 | CANTABRIA | 1223,43 * | |
| MB UNEMPLOYED | −273,09 * | −220,52 | |
| (−89,94) | CASTILLA LEON | 763,11 * | |
| MB RETIRED | 216,11 * | −160,52 | |
| −73,17 | CASTILLA LA MANCHA | 727,92 * | |
| MB OTHERS | 86,37 * | −147,01 | |
| −21,71 | CATALUÑA | 1828,63 * | |
| CONSTANT | 1107,64 * | −402,33 | |
| −105,36 | C. VALENCIANA | 742,26 * | |
| INCOME | 0,12 * | −159,24 | |
| −2662,4 | GALICIA | 758,10 * | |
| GENDER | 459,26 * | −156,38 | |
| −248,29 | MADRID | 1686,08 * | |
| −350,08 | |||
| MURCIA | 453,70 * | ||
| −85,75 | |||
| NAVARRA | 1964,46 * | ||
| −408,74 | |||
| PAIS VASCO | 2328,08 * | ||
| −515,59 | |||
| RIOJA | 1136,52 * | ||
| −201,94 |
***, ** and * represent significance at the 1%, 5% and 10 % levels respectively.
Source: own work based on Household Budget Survey for 2010
Notes: T-statistics are in parentheses.
B Staggered pay-as-you-go funding model
Consider a population
where:
x: Minimum age[3] as from which citizens are entitled to the BSP.
w: Maximum age reached
s: Number of different BSPs associated with different characteristics of individuals.
At age xi age group the number of beneficiaries comprises the sum total of the beneficiaries involved according to the different factors in year z. If benefits are paid out evenly over time then in year z spending on benefits is:
For the whole population, and for year z total spending of universal benefits BSPTz is:
For a 4-year period the current value (VABSPT) is:
where
Income is calculated via the demographic/financial structure of contributors in year z:
For benefits paid out evenly over time, with kz being the constant percentage of wages taken up by contributions in year z, the contribution for year
For the 4-year period the current total value (VAT) of the wage bill is given by
Where the proportion of the wage bill of persons in work represented by the benefit results from the equivalence for those four years:
In other words
C Variables which make up each scenario
For demographic trends the age structure of the population indicates the potential number of contributors and the number of beneficiares in the coming years. The general population data that need to be studied requires a breakdown of the population by age and sex, a study of fertility rates and percentage of births of each sex, information about mortality rates and inmigration and emigration rates and their variations (Plamondon et al., 2000).
For economic trends the main variables that provide information in the scope of our study are the percentage of GDP, variations in the consumer price index (CPI) for the basic products and variations in the benefit updating rate. Thus, the percentage of GDP earmarked for funding indicates the level of spending that a forward-looking, efficient public administration can handle without problems in even the most adverse of circumstances.[4] In addition, variations in the consumer price index (CPI) for the basic products covered by BSP need to be taken into account. This is because the funding model proposed is intended to fund basic social benefit for the next 12 years, and given that such income is intended to cover spending on basic necessities. Eventually, variations in the benefit updating rate are relevant too. The 12-year time-frame envisages an interest rate for updating the relevant amounts, free from investment risks.
For job market the main variables that determine the structure and potential changes in the job market are trends in wages and the variation in the number of individuals who change from one employment status to another.[5]
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